Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit Sales 50,000 75,000 90,000 30,000 June The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of- month Inventory levels must equal 10% of the following month's unit sales. The Inventory at the end of March was 5,000 units Required: Prepare a production budget by month and in total, for the second quarter Down Under Products, Ltd Production Budget April May June Quarter unit sales production in un

Answer 1

Ans.	Down Under Products, Ltd.
	Production Budget
		April	May	June	Quarter
	Budgeted unit sales	50,000	75,000	90,000
	Add: Desired Ending inventory	7500	9000	8000
	Total needs	57,500	84,000	98,000
	Less: Beginning inventory	-5000	-7500	-9000
	Required production in units	52,500	76,500	89,000	218,000
	*Ending inventory = Units sales for next month * 10%
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Month				Month
April	75,000 * 10%	7500		April	Ending inventory of March	5000
May	90,000 * 10%	9000		May	Ending inventory of April	7500
June	80,000 * 10%	8000		June	Ending inventory of May	9000
	Beginning finished goods invenotry of current month =   Ending inventory of previous month